A new subsidies package for renewable energy about to be passed by the US is “extraordinarily important” and should help improve the outlook for the under-pressure wind industry, according to the chief executive of one of the world’s largest turbine manufacturers.
Henrik Andersen, chief executive of Danish wind turbine manufacturer Vestas, said that concern over whether the US could end its production tax credits (PTC) had led to “stop and go” conditions for the renewable industry in the past year, but a new climate bill should halt those worries.
“It’s extraordinarily important,” he told the Financial Times. “I think that will give some clarity and will accelerate renewables in the US for the next decade. It’s important for offshore wind, onshore, solar [and] power-to-x hydrogen.”
The US Senate passed Joe Biden’s flagship economic package, which includes support for renewable energy technologies, last Sunday. The bill still needs to pass the House of Representatives and be signed by the president before it becomes law.
Vestas and the rest of the wind industry have had a tough year despite rising interest in renewables following Russia’s invasion of Ukraine and worries among many western countries about how they will replace Russian energy.
Vestas reported second-quarter results on Tuesday below analysts’ expectations with an underlying operating loss of €182mn, versus the average forecast of a €143mn deficit.
But unlike German-Spanish rival Siemens Gamesa, which cut its full-year profit guidance again last week, Vestas held on to its forecast for an underlying profit margin of zero to minus 5 per cent. Its margin was minus 5.5 per cent in the second quarter.
Shares in Vestas rose by 8.6 per cent to DKr197.68 on Wednesday morning.
Andersen said it was “not an easy quarter at all” as Vestas and the renewables industry faced a “challenged world” with sharp increases in raw material costs and component prices.
He added that Vestas had been able to raise prices to the highest level in a decade, so by working through its €19bn order backlog it would move closer to profitability. He stressed that the second half of the year would compare “positively” to the first half.
“There should be an improvement,” he added, pointing to “six to eight” quarters of improved pricing.
Martin Wilkie, analyst at Citi, said the new US PTC regime would give “unprecedented visibility” for turbine manufacturers in the US as it would be available on new projects until at least 2032, leading to significant upgrades for Vestas’s forecast revenues from 2024 onwards.